For some time there has been concern that penalties imposed for health and safety and corporate manslaughter offences, particularly on large organisations, were too low and the approach to sentencing in the courts inconsistent.
In response to that concern, on 3 November 2015, the Sentencing Council issued new guidelines which will apply to sentencing in all health and safety and corporate manslaughter prosecutions.
It will be mandatory for courts to follow the guidelines for all sentences passed after 1 February 2016, regardless of whether or not the offence took place before that date.
This heralds the start of an era where sentencing in health and safety offences will increase dramatically in order to have a real economic impact and bring penalties in line with those imposed on financial institutions. Higher fines will also carry significant commercial and reputational consequences. Tough new sanctions will be a timely reminder that standards in health and safety management cannot slip.
Range of fines
Under current guidelines, fines for health and safety offences resulting in death should not normally be less than £100,000 and for corporate manslaughter not less than £500,000. Those figures pale into insignificance when compared with the incoming guidelines.
Under the new guidelines fines will be calculated in a staged process having regard to the level of harm, culpability and an organisation’s turnover.
An organisation's turnover will be the starting point for the level of fine. For the most serious health and safety offences, fines of up to £10 million are envisaged for large organisations (those with a turnover greater than £50 million), up to £4 million for medium-sized organisations (turnover between £10 million and £50 million), up to £1.6 million for small organisations (£2 million to £10 million) and up to £450,000 for micro-businesses (less than £2 million). For corporate manslaughter the penalty for a large organisation may be up to £20 million.
The courts are then invited to take a step back and adjust the level of fine after taking into consideration any aggravating factors, such as relevant past convictions, cost cutting at the expense of safety and a poor health and safety record, along with any mitigating factors, such as high level of co-operation with the investigation, self-reporting and acceptance of responsibility.
In relation to very large organisations, who are defined by the guidelines as having a turnover that greatly exceeds £50 million per annum, the financial impact from the new sentencing regime will be even more significant. In such cases, the guidelines require the courts to consider whether it is necessary to look beyond the sentencing range for large organisations to achieve a proportionate sentence. Fines in excess of £10 million for very large organisations who have committed a serious health and safety offence are anticipated. A fine of this level would exceed the highest fine imposed to date in England and Wales, which was £7.5 million imposed on Balfour Beatty Rail Infrastructure Services arising from the Hatfield train crash in 2000 when 4 passengers were killed and a further 102 injured.
The new guidelines are also likely to result in an increase in custodial sentences for individuals who have committed a health and safety offence.
Read more on how the courts will calculate fines here.
Whilst no one within the chemical and manufacturing sector would disagree with the desire to improve and maintain standards of occupational health and safety, the penalties for not doing so will be very significant indeed. Whether such an approach will act as a deterrent and lead to heightened standards is yet to be seen, but in preparation organisations should consider the following:
- Review the current approach to the management of health and safety to ensure that appropriate systems and standards are in place, not only in relation to the protection of the health and safety of direct workers but also in relation to any third parties which might be at risk, including contractors and sub-contractors
- Put in place an effective system of risk assessment and risk management identifying hazards and putting in place appropriate measures and precautions
- Make sure that there are robust processes for procuring, appointing and monitoring contractors
- Ensure that health and safety policies and procedures are relevant, communicated and enforced, using the disciplinary process if appropriat.
- Ensure everyone in the organisation understands and accepts their personal responsibility for health and safety; leadership from the very top in this respect is crucial.
- Make sure that in multi-site operations there is consistency of approach.